European companies could find their credit ratings cut as a result of unfunded pension liabilities – though there is no “immediate” concern, says Standard & Poors.

The US ratings agency said in a statement that European corporate credit ratings could be cut as a result of their pension liabilities. But “as yet there are no rated companies in Europe where the scale of deficits is an immediate rating concern,” it added.

In its survey of more than 500 rated corporate and infrastructure issuers through Europe, S&P found less than 5% to have very substantial underfunded post-employment liabilities.

But given shaky markets, and with little available data so far for financial year 2002, the situation could change, warns S&P analyst Emanuel Dubois-Pelerin.

Says Dubois-Pelerin: “It is difficult to determine with certainty whether certain companies that at the last financial year-end were fully funded would not incur significant gaps at the next full-year reporting dates. As a result, S&P will continue to factor the evolution of the unfunded pension positions in its ratings."

The news will come as a relief to German corporates, which seemed most under threat of being downgraded as a result of their pension liabilities. In September a report by Dresdner Kleinwort Wasserstein revealed that German firms are significantly more at risk of a ratings downgrade than companies in other European countries.

Dresdner analysed the pension fund status of 47 German companies that issue bonds, finding only six to have fully funded schemes, and S&P’s survey also pinpointed Germany as a high-risk country as it posted a “higher-than-average proportion of companies with significant unfounded commitments.”

As yet, there appears no imminent risk for Europe’s corporates – it was originally expected that the survey would lead to a deluge of ratings cuts – but S&P states that it will continue to “factor the evolution of the unfunded pension positions into its ratings, particularly as the continuing slide in most European stock markets exacerbates these liabilities”.